Home ownership losing popularity

By
Industry Observer

Home ownership is at its lowest rate in this millennium.  In the meantime, rent levels are climbing faster than a scared squirrel.  It would seem that this is a perfect scenario for large masses of first time home buyers stampeding toward every home with a for sale sign in the front yard.  But, that's not what's happening.

The choice to remain a non-buyer is a popular one, and there are many reasons.  Some folks make the choice simply because the down payment requirement creates a barrier to their paycheck to paycheck financial plan, and that's probably a good thing.  If you can't afford the down payment, you probably can't afford to own a home -- or can you?  Rent payments are higher than many home loan payments plus other owning expenses, so there may be a case to be made for lower entry requirements for a home loan.

Sometimes, debt levels are too high, and they will remain too high to qualify for home acquisition financing.  As most of us know, there is a large number of people who have a college bill that will be with them for many years to come.  They are just plain out of the market, like it or not.

There are also many folks who simply need the flexibility to remain mobile for career reasons.  They want to remain "free' to chase dollars across the country or even around the world.  I pity them. 

There has always been a slice of society that prefers having someone else take care of maintenance and repairs, and someone else providing amenities that they enjoy.  There is a related time commitment that comes with home ownership that lowers its attractiveness.  The industry has responded somewhat to this preference with both free standing houses and condo-townhouse developments which include exterior maintenance and amenities similar to luxury rentals.  Things like pools, exercise facilities, etc. are often part of both rental property and association tied owned homes.  It's an acceptable compromise for some people.

Home ownership levels will rise as the cost differential moves substantially further in the direction of owning over renting.  My guess is that it will be at the least several more years before there is a meaningful increase.

 

 

Posted by

 Mike Carlier  Lakeville, MN

 

612-916-3033

 

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Rainmaker
3,978,945
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Do you think that part of the less ownership is part of the fiasco we just went through over the past 5-6 years.

Apr 16, 2015 12:27 PM #1
Ambassador
3,080,588
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

We're seeing a lot of millenials jumping into home ownership in Northern VA.  I am thankful.

Apr 16, 2015 01:27 PM #2
Rainmaker
522,122
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Bill, of course the houing depression affected the level of home ownership.  Many of the people who lost their homes then have reached the point where their finances and credit have improved to make them again home buying eligible.  However, there seems to be a substantial reluctance to enter the market again.  Given that home prices have not fully returned to their pre-depression highs, and that mortgage interest rates are extremely low, it appears that there are plenty of ways, but not as many wills.

Chris Ann,  given the supply of millenials, do you feel that the demand has increased incremantally?  With the percent of home buyers who are first timers at a three decade low, there seems to be an indication of national loss of interest in home ownership.  As an industry observer, it would appear to me that, although there is still plenty of opportunity for business for individual real estate professionals, the overall industry is still struggling, and that affects the national economy. 

Apr 16, 2015 11:23 PM #3
Rainmaker
1,483,031
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Calabasas CA

I do not think that the home ownership is losing popularity. Here in my area less and less people can afford a home( at least, here in L.A.).

Apr 25, 2015 05:13 PM #4
Rainmaker
522,122
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Inna, I agree that in the sense of being a concept that is liked by many people, home ownership is still very popular.  In the sense of being supported by conscious decisions by people who are willing and able to buy, I think that its downward trend will continue for at least several years.

Apr 25, 2015 11:15 PM #5
Rainer
2,100
Chad Fleming

A lot of ups and downs with this one. Great post though!

Chad Fleming- Minneapolis Home Inspector 

May 20, 2015 12:43 PM #6
Rainmaker
522,122
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Thanks for commenting, Chad.  As you said, ups and downs.  I have had a couple clients whose mobility requirements forced them to make a decision during the housing depression, either sell at a huge loss, or rent the old place out and become a landlord.  Today their old homes have recovered substantially in value, but their cash flow from rental just keeps getting better and better, and they will not even think about selling the place.  Many distressed owners from a few years ago are now real estate tycoons. 

May 21, 2015 01:30 AM #7
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Rainmaker
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Mike Carlier

More opinions than you want to hear about.
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